Recent Trends in Shareholder Class Action Litigation: Filings Stay Low and Average Settlements Stay HighBut Are These Trends Reversing?
Mondaq Business Briefing › United States Law Articles in English (2007)
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Recent Trends in Shareholder Class Action Litigation: Filings Stay Low and Average Settlements Stay HighBut Are These Trends Reversing?
Originally published September 2007
By Todd Foster, Ronald I. Miller, Ph.D., Stephanie Plancich, Ph.D., Brian Saxton, Svetlana Starykh1OVERVIEW: TREND OF LOWER FILINGS AND BIG SETTLEMENTS CONTINUES IN 2007, WHILE MEDIAN INVESTOR LOSSES AND ACCOUNTING ALLEGATIONS DECLINE IN RECENT FILINGSFrom 1998 through 2005, there were well over 200 federal class action filings each year—on average, there were 284 filings per year during this period. But in 2006, filings dropped sharply, with only 136 cases filed during the year. This pattern has continued: through June 30, 2007, only 76 cases have been filed. Annualizing the six months' worth of data, we project 152 filings for full-year 2007. At the same time additional defendants finalized their settlements in the Enron and McKesson litigation, further increasing the total settlement amounts in these giant cases, and Tyco has announced a near $3 billion tentative settlement. These giant settlements—along with other big settlements over $100 million—have increased average settlement values in 2006 and 2007 to an all-time high. For the first time, all of the top ten shareholder class action settlements exceeded $1 billion. How might these trends develop in the future? The high average settlement values observed in 2006 and 2007 are the result of resolutions of cases filed primarily between 2002 and 2004. Will the 2006 and 2007 filings lead to similarly l...See the full content of this document
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